Natural gas impact fee headed to Gov. Corbett's desk.

Democrats slam bill as giveaway to gas industry

Republicans call it an economic driver.

HARRISBURG -- Legislation that would require Marcellus shale drillers to pay a local impact fee to cover the public cost of natural gas exploration is headed to Gov. Tom Corbett's desk.

The state House voted 101-90 on Wednesday after hours of sometimes rancorous debate to approve the fee, which is expected to raise $190 million in its first year, rising to $333 million in 15 years.

Because there are six vacant seats, lawmakers did not have to reach the customary majority of 102 votes to pass the bill. Only 99 votes were required for approval, a spokesman for majority Republicans said.

Locally, the 134th District seat formerly held by Republican Doug Reichley is vacant, pending an as-yet unannounced special election to fill it. Reichley is now a Lehigh County judge.

Just two Democrats broke with their caucus to vote for the bill, while nine Republicans voted against it. The ranks of breakaway Republicans included some of the chamber's most conservative lawmakers, such as House Environmental Resources and Energy Committee Chairman Scott Hutchinson, of Venango County, who has opposed any sort of fee or tax on drillers.

The Wednesday vote marks the end -- for the foreseeable future -- of a push dating to 2009 to impose an additional levy on the booming industry, whose supporters argue already pays state taxes and remits royalties for its activities on public land.

Floor debate saw Republicans portray the bill as a badly needed economic driver that's created jobs in a part of the state – rural northeastern and southwestern Pennsylvania -- that has had historically high unemployment and lacked for opportunity.

The legislation "strikes an appropriate balance between our great economic opportunity and our environmental responsibility," said Rep. David Reed, R-Indiana, who served on the joint House and Senate conference committee that approved the compromise bill, clearing the way for Wednesday's floor vote.

The Senate approved the bill Tuesday, shortly before Corbett delivered his budget address.

House Democrats, who have pushed unsuccessfully to impose what's known as a "severance tax," or a tax on the gas that drillers actually take out of the ground, dismissed the bill as a giveaway to the industry because of its low rate and what they said were insufficient environmental protections.

"This is the biggest corporate giveaway in Pennsylvania history," House Minority Leader Frank Dermody, D-Allegheny, railed, adding later, "Working families will be left with the brunt of the taxes, while corporations will get off virtually scot-free."

In a statement, Corbett said the legislation "reaffirms our strong commitment to safe and responsible natural gas development here in Pennsylvania,"

The new impact fee would be indexed to gas prices and would be imposed at a base of $40,000 per-well to as much as $60,000 per-well, raising $190,000 to $355,000 per-well over 15 years.

The money raised by the well fee would primarily go to local governments where drilling activity is taking place. The remainder, about 40 percent, would go to the state environmental and infrastructure programs.

The per-well rate is among the lowest among gas-producing states, including the per-well total of $993,700 in West Virginia and $878,500 in Texas, the Associated Press reported earlier this week, citing research by the Pennsylvania Budget and Policy Center, a liberal think-tank in Harrisburg.

Pennsylvania is the only major gas-producing state that does not impose a severance tax on drillers.

Under the language lawmakers were approved Wednesday, counties that host drilling would be given the option of imposing the fee, a position originally supported by the Corbett administration.

Compromise language approved by the joint House and Senate conference committee on Monday would also allow the fee to be imposed if half of the municipalities in the county voted to do so.

The revenue generated by the fee would be collected and distributed by the Pennsylvania Public Utility Commission, which would also be responsible for evaluating challenges by gas companies to local ordinances governing drilling.

Democrats slammed the language, saying it would require local governments to surrender control over their own destiny to Harrisburg and to drillers. Republicans fired back that the bill still preserved a measure of local control.

"The people of Pennsylvania deserve better," said Rep. William Kortz, D-Allegheny.

Doug Hill, the executive director of the County Commissioners Association of Pennsylvania, said his group supports the compromise language.

"It gives [counties] the flexibility to touch a long list of impacts," he said. "We like the fact that it's collected by the state … We also like that [money for] transportation and greenways," is returned to the counties.

Environmentalists were sharply critical, echoing Democarats' charges that it amounted to a giveaway to the gas industry.

""If legislators were looking to pass a proposal that will allow more gas drilling near people's homes, and the parks, playgrounds and schools where our children play and spend their days, then 'Mission Accomplished,'" Erika Staaf, of the activist group PennEnvironment said in a statement.